Foreign Ownership Shares and Trade Propensity in Indonesian Edible Oil, Vegetable and Animal Fats Industry

Abstract

Presidential Regulation (Perpres) No 44/2016 states that in thevegetable and animal crude oil industry, copra industry, coconutoil industry, palm oil industry, foreign ownership is limited at amaximum of 95 percent. These industries are included in the edibleoil, vegetable and animal fats industry (ISIC 104). This studyanalyzes the effect of foreign ownership share on the trade propensityin the edible oil, vegetable and animal fats industry in Indonesiausing the Tobit model. The data used are the cross-section data from2015 Annual Survey of the Manufacturing industry from StatisticsIndonesia. The results show that firms with foreign ownership shareof more than 95 percent have the same export propensity with foreignownership of between 50 and 95 percent. However, the importpropensity of firms with foreign ownership between 50 and 95 percentis the lowest compared to other ownership. The government shouldcontinue to restrict foreign ownerhip shares at the maximum of 95percent in this industry.How to Cite:Nauly, D. (2022). Foreign Ownership Shares and Trade Propensity in Indonesian Edible Oil, Vegetable and Animal Fats Industry. Signifikan: Jurnal Ilmu Ekonomi, 11(1), 95-106. https://doi.org/10.15408/sjie.v11i1.18408.